How would you invest $400k ?

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CrackAddict

Trad climber

Canoga Park, CA

Nov 28, 2011 - 05:56pm PT

Deposit $400K in an Ameritrade Leveraged account.

This gives you approximately $800K buying power.

Purchase $800K worth of SDS ( S&P500 2x Short leveraged ETF )

Don't do this. Even if you are correct about the bust, your timing has to be spot on or you will lose everything from volatility leakage.

Double short/long ETFs are a disaster if held for longer than a few days. Look at all the double shorts and superimpose the double long positions on them. In a relatively short time they both become asymptotic at zero.

The reason for this is simple, if the ETF tries to double the daily change, changes are usually +- a percent or two per day, but going down 1% and up 1% do not get you back to where you were, you are still down. The effect is the same whether it is double short or double long.

CD's are a terrible choice though also. Even the government admits we have 4% inflation (go to shadowstats.org to see the real rate) and CDs pay what, 1%? So after 10 years your money is worth about 74% of what you started with.

I would buy real things, land, commodities, gold, silver, copper, stocks in companies that do business overseas.

Incidently, if more inflation is in our future (I would bet that it is, once our obligations become larger than our ability to sell debt, our government will be forced to steal even our meager savings), then real estate is probably the best investment, but if you really want to make money don't use cash. Buy with the best fixed rate loan you can get and leverage yourself to the limit. Eventually rent will be sky high and the number on the postage stamp will be larger than the number on your mortgage check.

Roger Brown

climber

Oceano, California

Nov 28, 2011 - 06:05pm PT

Paying off the house as fast as possible worked for us. We payed off our original GI Bill loan two years early. What a great feeling. Things just seemed to be easier after that. Been in this house for 26 years now, and we ain't going nowhere:-)

Hawkeye

climber

State of Mine

Nov 28, 2011 - 06:09pm PT

Hire a sniper and take care of guys like Fattrad.

this was a really shitty thing to even infer Coz.

barry ohm

Trad climber

escondido, ca

Nov 28, 2011 - 06:13pm PT

I would pay off the House any any credit so I could live debt free. then I would make sure I had 1 years worth of money in a FDIC insured account to cover in case of a emergency, Then take whats left and go on a road trip. Cheers

pyro

Big Wall climber

Calabasas

Nov 28, 2011 - 06:35pm PT

boodawg is right.

Elcapinyoazz

Social climber

Joshua Tree

Nov 28, 2011 - 06:42pm PT

Hookers and blow dude, hookers and blow.

Hawkeye

climber

State of Mine

Nov 28, 2011 - 06:52pm PT

least he could have done fattrad is to suggest some pepper spray, or a tazer....

:)

FRUMY

Trad climber

SHERMAN OAKS,CA

Nov 28, 2011 - 06:54pm PT

Fattrad I guess guys like you are why I use a 1903D Springfield 30-6.
Of course it should be without saying pay off your home & all debt first thing.
Second live under your means.
Third invest wisely what ever the investment.

Then 14,000 cans of sardines.

nature

climber

back in Tuscon Aridzona....

Nov 28, 2011 - 06:56pm PT

cuz you know that'll be one hell of a SushiFest!

FRUMY

Trad climber

SHERMAN OAKS,CA

Nov 28, 2011 - 07:06pm PT

Sushifest -- Sushifest

Bowser

Trad climber

Red River NM

Nov 28, 2011 - 07:09pm PT

I can't believe you guys are suggesting he put it in a bank or stocks.

Duhhh.....

Real estate, gold, and coffee.

TB

Mighty Hiker

climber

Vancouver, B.C.

Nov 28, 2011 - 07:14pm PT

A friend who is a successful investment advisor in Vancouver had an article published in the paper here yesterday, with investment advice.

Client Age 50 to 65 - BEST TIPS

Prepare a financial plan and update it every few years or when there is a significant life event (divorce, career change, etc.). If you fail to plan, you plan to fail.

Don’t procrastinate – if you start early, time is your greatest ally; if you delay, time becomes your greatest enemy.

Live within your means.

Marry well.

Identify your risk tolerance and invest within it at all times.

Know how your advisor is compensated. Is the compensation scheme likely to influence your advisor’s advice?

Don’t buy DSC funds. (= deferred service charge)

If you don’t understand it, don’t invest in it. If you don’t have the skills to properly analyze an investment, don’t invest in it.

Invest for tax efficiency, but don’t let the tax tail wag the investment dog.

“I have met the enemy and he is us” – You and your emotions are probably the greatest obstacle to your long-term investment success. Work with an advisor you trust. Trust is crucial because at some point in your relationship with your advisor your short-term investment results
will not be as either you or your advisor would like. It is at that point, when they recommend that you stay the course, that this trust between advisor and client pays dividends.

Prepare a will and a Power of Attorney.

Properly insure your risks.

bluering

Trad climber

Santa Clara, CA

Nov 28, 2011 - 07:19pm PT

Real estate and silver.

powderdan

Social climber

mammoth lakes

Nov 28, 2011 - 07:26pm PT

what a dilema to have!

tolman_paul

Trad climber

Anchorage, AK

Nov 28, 2011 - 07:27pm PT

One other thing. This statement was made above:
"Professional money managers interest is in enriching themselves, if you make a proffit that is secondary to their primary interest."

I still stand by that point. Sure, those various entities may be legally bound to various degrees to invest my money into what is supposedly my best interest, but that doesn't mean there is any gurantee on a return on those investments, nor any protection against losses. Whether or not I make a proffit or suffer a loss, they take home a paycheck. I've lost a fair some of money over the years trusting my hard earned dollars to prfessionals.

My personal somewhat jaded and slightly conspiratorally minded thought is that the push to 401k's is that it has been means of the bankers/stock brokers to steal vast somes of money from the working class by pushing them to have their own retirement funds, then raiding those funds through market manipulation. Remember, those $'s didn't just disapear, they went somewhere, or rather into somebody elses accounts.

I look at those I know who have become wealthy, and they didn't become wealthy via trusting someone else to make money with their money. They used their own personal knowledge and skills to start small businesses or invest directly into companies, real estate etc. Who better to know your local real estate market then you, who can see what the trends are in house prices, the local economy etc. Maybe it makes sense for you to get a rental property, especially with foreclosures on the market, maybe it doesn't in your area.

I'd say stick the $ into federally insured savings acounts for 1 year, and spend every spare minute figuring out how you can best use that money to live the kind of life you want to live. Maybe that's getting a 50' sailboat and traveling the world, maybe it's a cabin in the boonies with 5 acres ot grow your own food, maybe it's a few acres in El Portal and a 5th wheel trailer with daily commutes to Yosemite to climb every day, maybe...

It isn't enough money to be self sustaining in surburbia without additional income, but it is enough money to get out of surburbia and lead a really interesting life.

FRUMY

Trad climber

SHERMAN OAKS,CA

Nov 28, 2011 - 07:39pm PT

Mighty Hiker that is great advice.
Most of my life I invested in property. In 2004 I started selling my investment properties & finished buy the end of 2005.
The only way I would invest in land now would be like boodawg was saying -- something I was going to work & live on.

CrackAddict

Trad climber

Canoga Park, CA

Nov 28, 2011 - 08:30pm PT

Client Age 50 to 65 - BEST TIPS

Prepare a financial plan and update it every few years or when there is a significant life event (divorce, career change, etc.). If you fail to plan, you plan to fail.
Don’t procrastinate – if you start early, time is your greatest ally; if you delay, time becomes your greatest enemy.
Live within your means.
Marry well.
Identify your risk tolerance and invest within it at all times.
Know how your advisor is compensated. Is the compensation scheme likely to influence your advisor’s advice?
Don’t buy DSC funds. (= deferred service charge)
If you don’t understand it, don’t invest in it. If you don’t have the skills to properly analyze an investment, don’t invest in it.
Invest for tax efficiency, but don’t let the tax tail wag the investment dog.
“I have met the enemy and he is us” – You and your emotions are probably the greatest obstacle to your long-term investment success. Work with an advisor you trust. Trust is crucial because at some point in your relationship with your advisor your short-term investment results
will not be as either you or your advisor would like. It is at that point, when they recommend that you stay the course, that this trust between advisor and client pays dividends.
Prepare a will and a Power of Attorney.
Properly insure your risks.

I guess if you marry well, you don't need the other tips